Daily Market Update – April 22, 2015 (8:00 AM)
What started off with some promise as IBM reported its earnings after the closing bell on Monday turned into some disappointment as a handful of DJIA components also reported earnings prior to the open on Tuesday.
The net result was more of the same.
Companies reporting improved bottom lines but without meeting top line expectations, with currency exchange being top at the list for reasons given.
This time the market wasn’t too pleased, after having given a pass to those reporting similar experiences during the first week of earnings season. The displeasure was probably muted a little as the bottom lines were still better than expected, as those expectations were already lowered across the board.
As a result the DJIA had flirted with a triple digit loss going into the final minutes of trading, but was able to pare that down just a bit, but the broader S&P 500 didn’t perform as weakly as the DJIA.
With yesterday’s pullback, the DJIA is a full 1% away from its historical April performance since 2000, but if anything is really clear, it’s just how quickly sentiment changes and the markets move to keep pace,
This morning are more earnings reports from DJIA components, including Boeing and Coca Cola, but this time those early indications were positive, although those conference calls were scheduled to begin after the market opens this morning, so it can still be anyone’s guess as to where they may pull the DJIA and whether another dichotomy between it and the S&P 500 occurs today.
The market looks as if it may get off to a mildly lower start, but the kind that neither seems to have conviction nor to be based on any economic news or otherwise.
This morning Existing Home Sales are released and while I usually don’t think too much about that report, it comes during a very quiet week and may have a little more importance, as may the Petroleum Status Report.
The Existing Home Sales are expected to be higher as the excuse of bad winter weather is thought to be fully exhausted at this point. A strong number, especially a very strong number could be negative for the market if it starts to ignite interest rate concerns again. It’s been a few weeks since we’ve been so hyper-focused on interest rates, but sooner or later that issue will re-surface and it’s hard to imagine how that would be a catalyst for anything other than a short term move lower, despite the general consensus that a reasoned methodical increase in rates would be a good thing for all concerned.
With only 2 new positions added this week, despite having cash reserves replenished with last week’s assignments, I don’t think there will be too many reasons to consider dipping into cash to add additional positions.
While there’s still plenty of time left for the week to unfold, I’m hoping that the week’s income stream will find some help from rollovers, although I might be willing to forego the income if it meant assignments of some positions that are currently possible assignment candidates.
While I would still like to see some new covered positions created from those sitting idly and not earning their keep, this week doesn’t look as promising as the past two, unless something can spark a fire. While there’s a temptation to look at some longer time frame contracts to try and squeeze something out of those positions, the volatility just keeps getting lower and lower and the premiums follow in the same direction.
For now, the volatility seems to have gotten off of its pattern of the past few years and is over-due for a little spike. Until that day comes, unless there is also the opportunity to take advantage of some earnings related premiums, I think there’s reason to sit tight before committing to those longer term time frames.
Right now, I’d just be happy yo get through the week.